250 word response for each question

1.) Another important law in economics is the “law of marginal returns or the law of increasing costs”. Discuss in terms of your study in this course, how might you know that you are at a point of diminishing returns, or where more study will not benefit you like it did before? Can you identify any of the costs discussed in this lesson in your decision about how much study is enough? (250 words)

2.) Why might a profitable motel shut down in the long run if the land on which it is located becomes extremely valuable due to surrounding economic development? What kinds of costs are involved in making a decision to shut down? (250words)

3.) How would a low-cost price leader enforce its leadership through implied threats to a rival? How does a firm become a “low cost” price leader? Discuss the specific type of market structure that implied threat strategy can be adapted. (250words)

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Question Answers

All productive processes adhere to the laws of marginal returns when all factors are kept constant and one is increased. As per the law, adding to one of the factors involved in the production process while holding all the other variables constant will in the long-run lead to lower returns per unit of input in the production process (Pichère, & Probert, 310) . It is ideally a description of the existing relations between doing more of something and the expected return from such actions. For instance, in studying, there is a limit to which such an action will translate to retention of studied information, passing of exams and consequently being a sought after asset in the job market. Beyond some point, one ceases to retain information.

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